As investors fretted about last week during the negotiation process, the Greek government and private bondholders did not reach an agreement on a deal that would swap out debt which is due to mature in mid-March; a deal that is critical if Greece intends to avoid a disorderly default. Private bondholders reported that they could no longer “voluntarily” accept any additional losses, having reached their own loss limit.
With the news the Euro’s rally abruptly ended, and the Euro-Dollar slipped 0.3% to trade at $1.2895, off the $1.2930 traded in late New York on Friday. A currency analyst in Tokyo says that given where the EUR/USD pair stalled, just ahead of $1.30, it’s doubtful that that level will be broken in the near future and traders should expect some choppiness ahead especially given the closings in Asian trade this week as a result of the Lunar New Year holiday.
What will happen now is that the Eurozone’s finance ministers, who meet later today, will need to work out the restructuring plan for Greece which will take into consideration the latest challenge. Analysts expect the plan to be hammered out over the coming days, with a final version ready before the week’s end.
